Gran Tierra Energy Inc. · AMEX:GTE
Gran Tierra Energy — Investor Presentation (June 2019)
43 slides from Gran Tierra Energy's investor presentation, June 2019
Slide 1: Creating Value in Colombia & Ecuador
Creating Value in Colombia & Ecuador June 2019
Slide 2: General Advisory
General Advisory core areas; our prospects and leads; the plans, objectives, expectations and intentions of the Company regarding production, exploration and exploration upside, drilling, permitting, testing and development; The information contained in this presentation does not purport to be all-i
Slide 3: Reasons to Invest in Gran Tierra
REASONS TO INVEST IN GRAN TIERRA development & exploration, 100% oil Balanced presence across all phases: production, Focused on low cost, conventional oil & gas High-Quality Profitable developments with low declines, >95% operated Assets Production Growth Access to infrastructure with spare c
Slide 4: Gran Tierra: Full-Cycle E&P Delivering Returns
GRAN TIERRA: FULL-CYCLE E&P DELIVERING RETURNS STRATEGY/TACTICS IMPACT ON SHAREHOLDER RETURNS Proven, Under-Explored Basins GROWTH Access to Existing Infrastructure SHORT CYCLE TIMES Strong Economic Environments STABILITY Competitive Fiscal Regimes ENCHANCED RETURNS Strong Financial Position RESILIE
Slide 5: Gran Tierra Snapshot
GRAN TIERRA SNAPSHOT Independent international exploration & production company focused 100% Diversified +95% in Colombia & Ecuador, attractive investment destinations High-quality, Operated Oil asset base Production Production 2016 2017 2018 Q1/2019 WI Production (boepd) 1 26,216 31,426 36,209 38,1
Slide 6: Colombia & Ecuador: World Class Oil Potential
COLOMBIA & ECUADOR: WORLD CLASS OIL POTENTIAL Total Basin GTE Cumulative Proved Oil 2018 Oil Net Land Production Reserves Production Position Basin1 (Bn bbls) (Bn bbls) (Kbbls/day) (MM acres) Middle Magdalena Valley 2.7 0.4 147 0.1 Llanos 6.7 1.3 586 0.8 Putumayo 0.6 0.1 36 1.0 Middle Magdalena Vall
Slide 7: Gran Tierra's Focused Strategy
GRAN TIERRA’S FOCUSED STRATEGY Targeting 3-5 x’s growth in NAV/share in 5 years S T R AT E G Y TAC T I C S Proven, Under-Explored Conventional Apply Proven Technology Hydrocarbon Basins World-class exploration program targeting WI Unrisked GTE has been able to reduce Mean Prospective Resources of 1.
Slide 8: Delivering on Our Focused Strategy
DELIVERING ON OUR FOCUSED STRATEGY 215 212% Production Growth1 Reserves Growth1 3P reserves (mboe/d, gross WI) (mmboe, gross WI) 69% 150 163% Production 2P reserves 38.2 22.6 69 57 67% 70 1P reserves 42 Q2/2015 Q1/2019 Dec/2015 Dec/2018 1P Reserves 2P Reserves 3P Reserves Expanded Exploration Potent
Slide 9: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK LEVERAGE MAINTAIN INVESTMENT SHAREHOLDER DISCIPLINE FLEXIBILITY CRITERIA RETURNS o Target net o Undrawn $300MM o Apply investment o Return 2019F free debt/EBITDA of 1.0- committed bank target of minimum cash flow to 1.5x facility, no near-term IRR of 20% (AT) to sharehol
Slide 10: Steadily Growing Production
STEADILY GROWING PRODUCTION 45,000 40,000 Actuals 35,000 30,000 boepd 25,000 20,000 15,000 10,000 5,000 - 2015 2016 2017 2018 Q1/2019 From 2015 to Q1/2019, Gran Tierra forecasts average production growth rate of 16% per year 1. Based on Colombia WI actual production only; growth rate based on averag
Slide 11: Access to Existing Transportation Infrastructure
ACCESS TO EXISTING TRANSPORTATION INFRASTRUCTURE Gran Tierra benefits from large spare capacity in pipelines & trucking throughout Colombia & Ecuador, which leads to: • Strong oil prices linked to Brent • Narrow oil price differentials • Short cycle times • Quick access to world markets through ma
Slide 12: Large Takeaway Capacity = Strong Oil Prices
LARGE TAKEAWAY CAPACITY = STRONG OIL PRICES Vasconia – Brent differential Crude oil prices strong in Colombia & Key Differentials 0 0 Ecuador with steady, narrow differentials, -5 -5 unlike in the US & Canada; current differentials to Brent: -10 -10 -15 -15 • Vasconia (Colombia) = -$3.00/bbl -20 -
Slide 13: Significant Reserves Growth
SIGNIFICANT RESERVES GROWTH 250 Reserves Progression (MMboe) 2P Reserves by Property1 (MMboe) 200 65.6 Minor Fields 65.5 25 73.1 150 Ramiquiri 100 53.3 63.2 79.7 3 50 72.8 74.1 69.9 0 Acordionero Moqueta 2011 2012 2013 2014 2015 2016 2017 2018 9 76 Proved Probable Possible Achieved reserve replace
Slide 14: Deploying Capital Profitably
DEPLOYING CAPITAL PROFITABLY GTE already generates high return on average capital employed (“ROACE”), over 13% in 2018 20.00 3-Yr Avg 2P FD&A Costs (US$/BOE)1 GTE ROACE expected to trend toward long- 18.00 term internal rate of return target of 20%+ 16.00 FD&A (US$/BOE) 14.00 ROACE (%) 12.00 14%
Slide 15: Net Asset Value
Jun.14/2019 Share Price $1.85/share (USD) NET ASSET VALUE $9.11/sh 4,000 Dec.31/2018 NAV Before Tax (US$MM, US$/share)1 3,500 3,000 $3,503 $6.12/sh $1,151 2,500 2,000 $2,352 1,500 $1,422 $2.42/sh $1,412 $482 1,000 $1.85/sh 500 $930 0 Proved Net Debt Mar.31/2019 1P NAV Probable 2P NAV Possible 3P NAV
Slide 16: Acordionero – Asset Overview
ACORDIONERO – ASSET OVERVIEW ASSET DETAILS o 100% WI Gran Tierra o Generating free cash flow from day “0” o 2019 drilling program includes 15 wells Acordionero o Fault-bounded to the east / south o West dipping steep monocline o Producing Zones: Lisama-A and Lisama-C YE 2018 YE 20181 Category (MMbbl
Slide 17: Acordionero – Field Overview
ACORDIONERO – FIELD OVERVIEW 25,000 16.0 14.0 20,000 12.0 Oil (bbl/d) / Water (bbl/d) / Fluid (bbl/d) / Cumulative Oil (MMbbl) 10.0 15,000 Water Injection (bbl/d) 8.0 10,000 6.0 4.0 5,000 2.0 Acordionero Field Drilled 33 0 0.0 Producers 27 Dec/12 Dec/13 Dec/14 Dec/15 Dec/16 Dec/17 Dec/18 Injectors 4
Slide 18: Acordionero – Further Detail
ACORDIONERO – FURTHER DETAIL o 100% working interest (operator) NI 51-101 2017 YE 2018 YE Change o High netback ~19° API oil A C A C A C o Stacked pay: Sand Sand Sand Sand Sand Sand - Thick (~330’), permeable (200-1,300mD) Overview oil pay in Lisama A&C OOIP (MMbbl) 224 55 250 62 +26 +7 - New discov
Slide 19: Ayombero – Asset Overview
AYOMBERO – ASSET OVERVIEW ASSET DETAILS o 100% WI Gran Tierra o Highly-fractured, conventional carbonate o Significant potential in 3 horizons o 2019 drilling program includes 2-6 wells o Unrisked Prospective Resources1: Chuira 21 MMBOE (P90) & 119 MMBOE (P10) o Producing Zones: Galembo Ayombero YE
Slide 20: Ayombero – Field Overview
AYOMBERO – FIELD OVERVIEW Significant Upside La Luna Depth Map Ayombero-1 Logs o 3 wells drilled to date: similar lithologies, oil Chuira saturations & over-pressure in Galembo Ayombero Member of La Luna Carbonate reservoir, indicating reservoir & structural continuity o 600-700 ft gross reservoir,
Slide 21: Ayombero – Complex, but Significant Upside
AYOMBERO – COMPLEX, BUT SIGNIFICANT UPSIDE Reservoir Challenges Next Steps Potential Oil-In-Place Map Highly over-pressured formations Applying knowledge from similar, have proved challenging in terms challenging reservoirs which are of drilling & completion operations exploited successfully els
Slide 22: Putumayo & Oriente - Underexplored, Proven Basins
PUTUMAYO & ORIENTE - UNDEREXPLORED, PROVEN BASINS Colombia’s Putumayo basin is underexplored due to past above-ground security issues, now mitigated by Peace Agreement Same geology as Ecuador, where almost 6 billion bbls of oil produced1 Highly prospective geological trends in Ecuador extend i
Slide 23: Putumayo Basin Size of the Prize
PUTUMAYO BASIN SIZE OF THE PRIZE Total Putumayo – Unrisked Mean Prospective Resources (1,106 MMBOE)1 Structural 14% N-Sand 12% A- Limestone*74% Total Putumayo – Risked Mean Prospective Resources (298 MMBOE) 1 Structural 8% N-Sand 20% A-Limestone* 72% Dominant land position, large exploration upside,
Slide 24: World-Class Exploration Upside in Colombia
WORLD-CLASS EXPLORATION UPSIDE IN COLOMBIA GTE WI Risked Mean Prospective Resources (MMBOE) 400 Carbonate 361 350 18 16 Strat / Struc / Combo 29 300 118 25 250 59 200 150 100 214 243 50 0 A Limestone N Sand Structural La Luna (Ayombero) Combo* Structural & Combo PUT MMV LLANOS TOTAL 1,600 GTE WI Unr
Slide 25: New Country Entry into Ecuador
NEW COUNTRY ENTRY INTO ECUADOR GTE has been officially awarded three blocks in the Intracampos bid round Increases GTE’s acreage position in conventional resource plays in Ecuador and Colombia from 1.1 to 1.2 MM gross acres No costs payable upon signing Committed to drill 14 wells over the n
Slide 26: 2019 – Strong Netbacks, Balanced Capital Program
2019 – STRONG NETBACKS, BALANCED CAPITAL PROGRAM Capital Guidance Base Total Capital ($MM) $320-340 Brent Expense & Operating Netback Guidance ($/boe) $65.00/bbl 2019 Capex Program Seismic & Transportation & Quality Discount $11.00 - $13.00 Studies, $25- Royalties $9.00 - $10.00 30MM Operating Costs
Slide 27: 2019 Capital Program Details
2019 CAPITAL PROGRAM DETAILS Acordionero CPF Expansion Development Capital ($215-225 MM; ~65%) Acordionero (MMV) New truck loading facility o Drill 14 wells: 9 development & 5 water injection o Ongoing CPF expansion o Expand gas-to-power project to 20MW o Initiate natural gas injection project Putum
Slide 28: Sustainable Business
SUSTAINABLE BUSINESS Self-Funding Business Low Debt Levels Cash Flow & Uses @ $65/bbl Brent 2019F net debt1 to cash flow2 of 450 1.0-1.3x @ $65/bbl Brent 400 No near-term maturities: 350 300 Debt Maturity Profile 250 $ MM 200 $300 150 100 $300 $300 50 $115 0 2019 2020 2021 2022 2023 2024 2025 20
Slide 29: Environmental, Social & Governance Excellence
ENVIRONMENTAL, SOCIAL & GOVERNANCE EXCELLENCE SAFETY GHG EMISSIONS NATURAMAZONAS LICENSING In May 2019, GTE reached an Voluntary projects underway to Partnership with Conservation GTE has optimal performance important safety milestone with no eliminate routine flaring and use International, largest
Slide 30: Reasons to Invest in Gran Tierra
REASONS TO INVEST IN GRAN TIERRA development & exploration, 100% oil Balanced presence across all phases: production, Focused on low cost, conventional oil & gas High-Quality Profitable developments with low declines, >95% operated Assets Production Growth Access to infrastructure with spare c
Slide 31: Appendix
Appendix
Slide 32: Gran Tierra – Excellent Value Proposition
GRAN TIERRA – EXCELLENT VALUE PROPOSITION High-Quality Profitable Production Assets Growth • +95% operated, 100% oil • Short cycle times • Low decline rates • Focused on full-cycle returns • Low operating costs High-Quality Profitable Assets Production • Large inventory of • Top quartile netbacks Gr
Slide 33: Putumayo Basin - Geology Overview
PUTUMAYO BASIN - GEOLOGY OVERVIEW PROVEN OIL RESERVOIR API Net Pay Porosity Permeability Reservoir Play Type (degrees) (ft) (%) (mD1) N Sand Stratigraphic 15-25 5-40 10-30 10-1000 M2 Matrix + Stratigraphic 25-35 10-100 3-10 Limestone Fractures Stratigraphic Matrix + A Limestone Conventional 25-35 10
Slide 34: Putumayo N Sand Play
PUTUMAYO N SAND PLAY GTE has identified 27 N Sand prospects WI mean prospective resources: – 134 MMBOE (unrisked)/59 MMBOE (risked)1 N Sand relatively low risk for an exploration play (McDaniel estimated average chance of success = 50%)1 Of 82 exploration wells in Putumayo with structural ta
Slide 35: Hedging Summary
HEDGING SUMMARY Oil price 2019 hedges Period and Type of Instrument Volume (bopd) Reference Purchased Put ($/bbl) Sold Call ($/bbl) Collars: April 1, 2019 to December 31, 2019 5,000 Brent $60.00 $71.50 Period and Type of Instrument Volume (bopd) Reference Purchased Put ($/bbl) Deferred Premium Put (
Slide 36: McDaniel 2018 & 2019 Price Decks
MCDANIEL 2018 & 2019 PRICE DECKS Brent Comparison (US$/bbl) McDaniel, Jan 1, 2019 McDaniel, Jan 1, 2018 SEC Brent, Jan 1, 2019 SEC Brent, Jan 1, 2018 85 80 75 70 65 60 55 50 45 40 2019 2020 2021 2022 2023 2024 2025 2026 2027 36
Slide 37: Non-GAAP Measures
NON-GAAP MEASURES EBITDA EBITDA, as presented, is net loss adjusted for DD&A expenses, asset impairment, interest expense and income tax recovery or expense. Management uses this financial measure to analyze performance and income or loss generated by Gran Tierra's principal business activities prio
Slide 38: Non-GAAP Measures
NON-GAAP MEASURES Funds Flow from Operations Funds flow from operations, as presented, is net cash provided by operating activities adjusted for net change in assets and liabilities from operating activities and cash settlement of asset retirement obligation. Management uses this financial measure t
Slide 39: Presentation of Oil & Gas Information
PRESENTATION OF OIL & GAS INFORMATION BOEs (Barrel of Oil Equivalent) may be misleading particularly if used in isolation. A BOE conversion ratio of 6 thousand cubic feet of gas to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not
Slide 40: Presentation of Oil & Gas Information
PRESENTATION OF OIL & GAS INFORMATION Reserves and Prospective Resources Information Unless otherwise noted, estimates of the Company’s reserves, net present value of future net revenue attributable to Company’s reserves and prospective resources relate solely to the Company’s Colombia reserves and
Slide 41: Presentation of Oil & Gas Information
PRESENTATION OF OIL & GAS INFORMATION For a discussion of Gran Tierra’s interest in the prospective resources, the location of the prospective resources, the product type reasonably expected, the risks and level of uncertainty associated with recovery of the resources, the significant positive and n
Slide 42: Presentation of Oil & Gas Information
PRESENTATION OF OIL & GAS INFORMATION Disclosure of Reserves and Resources Information and Cautionary Note to U.S. Investors Unless expressly stated otherwise, all estimates of proved, probable and possible reserves and related future net revenue and prospective resources disclosed in this presentat
Slide 43: Investor Relations
900, 520 – 3RD AVENUE SW CALGARY, ALBERTA, CANADA T2P 0R3 END Investor Relations 403-265-3221 info@grantierra.com 43
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